Binance stops cash payment for P2P trades

The option came in handy in escaping the stifling imposed by on crypto trades.

Now, Binance, sources confirmed, has stopped offering the 'cash option' in rupee for such 'peer to peer' (P2P) trades. However, regular non-cash modes of payment in rupees are still available.

The exchange, which has had run-ins with regulators in some of the countries, is probably driven by the need to demonstrate a higher for gaining legitimacy in markets like India.

According to , founder of , a Bengaluru-based blockchain and crypto-focused law firm, "P2P cash transactions, with or without the involvement of any exchange, expose parties to serious physical and financial risk. There have been cases where traders have been physically assaulted and forced to transfer their virtual assets or hand over cash during physical meetings. Victims hesitate in filing criminal complaints due to regulatory uncertainty regarding the legality of such cash transactions, especially if it involves more than ₹2 lakh, and fraudsters prey on such fear."

Interestingly, the cash option still exists in UAE dirham - making it possible for Binance to match a buyer and seller located in while letting them settle the payment in cash. Traders say cash and cryptos are freely interchangeable in UAE with Dubai gradually positioning itself as the new cryptocurrency capital. In fact, some developers are willing to accept cryptos for payment.

While resident Indians trading on Binance against the transfer of cash here were treading a grey zone in foreign exchange regulations, even evading tax, the exchange was not technically on the wrong side of Indian laws. Binance was acting as a third party providing escrow services for transfer of cryptocurrencies which are not considered as legal tender in India. In such , Binance holds custody of the cryptos and releases them once the seller confirms having received the payment.

Traders can set a timer for concluding a trade and the buyer and seller can rate each other while the exchange steps only to mediate if there is a dispute between the counterparties. The P2P window with the rupee payment option has been used by some of the crypto brokers.

Source: Forex-Markets-Economic Times